Boston Scientific reports fourth quarter and full year 2009 results

Boston Scientific Corporation (NYSE: BSX) today announced financial results for the fourth quarter and full year ended December 31, 2009, as well as guidance for net sales and earnings per share (EPS) for the first quarter and full year 2010. 

Fourth quarter highlights (sales growth rates are at constant currency):

• Recorded net sales of $2.079 billion, at the mid-point of the Company's guidance range, and achieved adjusted EPS of $0.20, at the high end of the Company's guidance range, reporting a GAAP loss of $0.71 per share
• Maintained leadership position in the worldwide drug-eluting stent (DES) market with a 39 percent share, including a 46 percent share in the U.S. and a 44 percent share in Japan
• Increased worldwide Endoscopy sales 10 percent for the quarter, and reached the $1 billion milestone in 2009 worldwide sales  
• Increased worldwide Urology/Gynecology sales eight percent, including 23 percent growth in our Women's Health business
• Increased worldwide Neuromodulation sales 18 percent
• Generated 44 percent of sales from new products
• Received CE Mark approval and launched the internally developed and manufactured PROMUS^® Element™ Everolimus-Eluting Coronary Stent System in Europe
• Launched the COGNIS^® cardiac resynchronization therapy defibrillator (CRT-D) and TELIGEN^® implantable cardiac defibrillator (ICD) systems in Japan
• Issued $2.0 billion of senior notes and prepaid remaining term loan debt maturities
• Received ratings upgrade to investment grade (BBB-) from Standard & Poor's
• Resolved longstanding litigation with settlement of $1.725 billion

"We delivered a quarter in line with expectations, coming in at the middle of our sales range and the high end of our adjusted earnings range," said Ray Elliott, President and Chief Executive Officer of Boston Scientific.  "Endoscopy, Urology/Gynecology and Neuromodulation posted excellent growth, and we maintained our clear leadership in the global drug-eluting stent market.  In Japan, we have launched COGNIS, TELIGEN and our PROMUS^® Everolimus-Eluting Coronary Stent System, three important new products in this key market.  COGNIS and TELIGEN, the smallest and thinnest high-energy devices, are now available worldwide."

"The litigation settlement announced last week with Johnson & Johnson is part of our ongoing effort across the Company to reduce risk," said Elliott.  "We have the financial strength and flexibility to meet this obligation with no appreciable impact on our debt covenants and still retain significant liquidity."  

Fourth Quarter 2009

Net sales for the fourth quarter of 2009 were $2.079 billion, as compared to net sales of $2.002 billion for the fourth quarter of 2008. Excluding the impact of foreign currency and net sales from divested businesses, net sales were flat with the prior period.

Worldwide Cardiac Rhythm Management (CRM) group net sales for the fourth quarter -- on a reported basis -- were as follows:

(in millions) U.S. International Worldwide ------------- ---------------- ---------------- ---------------- Q4 2009 Q4 2008 Q4 2009 Q4 2008 Q4 2009 Q4 2008 ---------------- ---------------- ---------------- ICD systems $307 $299 $142 $128 $449 $427 Pacemaker systems 82 84 76 60 158 144 ---------------- ---------------- ---------------- 389 383 218 188 607 571 Electrophysiology 29 29 9 8 38 37 ---------------- ---------------- ---------------- Total CRM group $418 $412 $227 $196 $645 $608>Worldwide coronary stent system net sales for the fourth quarter -- on a reported basis -- were as follows:

(in millions) U.S. International Worldwide ------------- ---------------- ---------------- ---------------- Q4 2009 Q4 2008 Q4 2009 Q4 2008 Q4 2009 Q4 2008 ---------------- ---------------- ---------------- Drug-eluting $205 $231 $206 $198 $411 $429 Bare-metal 12 18 30 29 42 47 ---------------- ---------------- ---------------- Total coronary stent systems $217 $249 $236 $227 $453 $476>Reported net loss for the fourth quarter of 2009 was $1.075 billion, or $0.71 per share. Reported results included intangible asset impairment charges; acquisition-, divestiture-, litigation- and restructuring-related net charges; discrete tax items; and amortization expense (after-tax) of $1.379 billion, or $0.91 per share, which consisted of:

• $2 million, on both a pre-tax and after-tax basis, of intangible asset impairment charges;
• $3 million ($4 million pre-tax), of purchased research and development charges associated with the acquisition of certain technology rights;
• $5 million, on both a pre-tax and after-tax basis, of credits associated with certain prior-period divestitures;
• $28 million ($36 million pre-tax), of restructuring and restructuring-related costs associated with the Company's Plant Network Optimization program and 2007 Restructuring plan;
• $1.273 billion ($1.499 billion pre-tax), of litigation-related charges associated with the settlement of patent disputes with Johnson & Johnson;
• $31 million of income for discrete tax items related to certain tax positions taken in a prior period; and
• $109 million ($129 million pre-tax), of amortization expense.

Adjusted net income for the fourth quarter of 2009, excluding these net charges, was $304 million, or $0.20 per share.

Reported net loss for the fourth quarter of 2008 was $2.394 billion, or $1.59 per share, which included a $2.613 billion, or $1.74 per share, goodwill write-down. Reported results also included intangible asset impairment charges; acquisition-, divestiture-, restructuring- and litigation-related net charges; discrete tax benefits, and amortization expense (after-tax) of $83 million, or $0.05 per share. Adjusted net income for the fourth quarter of 2008, excluding these net charges, was $302 million, or $0.20 per share.

Full Year 2009

Net sales for the full year 2009 were $8.188 billion, as compared to net sales of $8.050 billion for the full year 2008, which included sales from divested businesses of $69 million. Excluding the impact of foreign currency and net sales from divested businesses, net sales increased four percent over the prior period.

Worldwide CRM group sales for the full year -- on a reported basis -- were as follows:

(in millions) U.S. International Worldwide ------------- ---------------- ---------------- ---------------- 2009 2008 2009 2008 2009 2008 ---------------- ---------------- ---------------- ICD systems $1,248 $1,140 $544 $541 $1,792 $1,681 Pacemaker systems 346 340 275 265 621 605 ---------------- ---------------- ---------------- 1,594 1,480 819 806 2,413 2,286 Electrophysiology 116 116 33 37 149 153 ---------------- ---------------- ---------------- Total CRM group $1,710 $1,596 $852 $843 $2,562 $2,439>Worldwide coronary stent system sales for the full year -- on a reported basis -- were as follows:

(in millions) U.S. International Worldwide ------------- ---------------- ---------------- ---------------- 2009 2008 2009 2008 2009 2008 ---------------- ---------------- ---------------- Drug-eluting $911 $833 $797 $801 $1,708 $1,634 Bare-metal 57 88 114 129 171 217 ---------------- ---------------- ---------------- Total coronary stent systems $968 $921 $911 $930 $1,879 $1,851>Reported net loss for the full year 2009 was $1.025 billion, or $0.68 per share. Reported results included acquisition-, divestiture-, restructuring- and litigation-related net charges; discrete tax items; and amortization expense (after-tax) of $2.207 billion, or $1.46 per share, which consisted of:

• $10 million ($12 million pre-tax), of intangible asset impairment charges associated primarily with certain Urology-related intangible assets;
• $20 million ($21 million pre-tax), of purchased research and development charges associated with the acquisition of certain technology rights;
• $2 million ($3 million pre-tax), of gains associated with the sale of non-strategic investments;
• $5 million, on both a pre-tax and after-tax basis, of credits associated with certain prior-period divestitures;
• $97 million ($130 million pre-tax), of restructuring and restructuring-related costs associated with the Company's Plant Network Optimization program and 2007 Restructuring plan;
• $1.771 billion ($2.022 billion pre-tax), of net charges associated with various litigation matters;
• $106 million of income for discrete tax items related to certain tax positions taken in a prior period; and
• $422 million ($511 million pre-tax), of amortization expense.

Adjusted net income for the full year 2009, excluding these net charges, was $1.182 billion, or $0.78 per share.

Reported net loss for the full year 2008 was $2.036 billion, or $1.36 per share, which included a $2.613 billion, or $1.74 per share, goodwill write-down. Reported results also included intangible asset impairment charges; acquisition-, divestiture-, restructuring- and litigation-related net credits; discrete tax items, and amortization expense (after-tax) of $622 million, or $0.42 per share. Adjusted net income for the full year 2008, excluding these net charges, was $1.199 billion, or $0.80 per share.

Guidance for First Quarter and Full Year 2010

The Company estimates net sales for the first quarter of 2010 of between $2.000 billion and $2.100 billion. Adjusted earnings, excluding acquisition-related credits, restructuring and restructuring-related costs, and amortization expense, are estimated to range between $0.13 and $0.17 per share. The Company estimates net income on a GAAP basis of between $0.14 and $0.20 per share.

The Company estimates net sales for the full year 2010 of between $8.100 billion and $8.500 billion. Adjusted earnings, excluding acquisition-related credits, restructuring and restructuring-related costs, and amortization expense, are estimated to range between $0.62 and $0.72 per share. The Company estimates net income on a GAAP basis of between $0.37 and $0.49 per share.

Boston Scientific officials will be discussing these results with analysts on a conference call at 8:00 a.m. (ET) Thursday, February 11. The Company will webcast the call to all interested parties through its website: www.bostonscientific.com. Please see the website for details on how to access the webcast. The webcast will be available for one year on the Boston Scientific website.

SOURCE Boston Scientific Corporation